The price freeze will save around £1,000 ($1,150) a year per household compared to rate cap increase which was scheduled for October 1, Truss said in Parliament two days after his appointment to replace Boris Johnson.
Truss said companies will get equivalent support, under a six-month scheme. After this, there will be continued support, particularly for vulnerable industries, The Guardian reported.
With these measures, the new conservative government hopes lower inflation, estimated at around 18% for this year, by up to 5 percentage points. In addition, it de facto nullifies the increase of up to 80% in energy bills planned for October and for which some 12 million people were at risk of falling into energy poverty.
Support for energy companies
In the face of fury from Labor opposition, Liz Truss announced another plan to cut gas and electricity prices paid by consumers through financial aid to energy companies.
It is a mechanism to inject liquidity through the Bank of England worth up to £40 billion. “We want to guarantee that the companies that operate in the wholesale energy market have the liquidity they need to manage price volatility,” the prime minister said.
Truss added that this measure will stabilize the market in the United Kingdom and reduce the probability that energy retailers will need state support, as happened last winter. “By increasing supply, boosting the economy, and increasing liquidity in the market, we will significantly reduce the cost of this intervention to the government.“, he stressed.
No place to tax unexpected income in the UK
The Leader of the Labor Opposition, Keir Starmercriticized the aid to companies announced by Liz Truss and assured that loans will increase because the Conservative government ruled out the windfall income tax.
“The Labor Party called for a price freeze earlier in the summer and was criticized for doing so,” he recalled, The Guardian reported, later celebrating the move. However, “the key question is who will pay for this?”
Starmer said energy companies will reap £170bn in windfall profits over the next two years. “Every pound the government refuses to raise in windfall profits tax… is a pound of additional borrowing. It’s that simple,” she stated.
Review of climate commitments
British Prime Minister Liz Truss also announced that in order to improve the UK’s energy security in the long term, two reviews will be carried out: one on regulations and the other on climate commitments.
In the opinion of the new executive, it is necessary to analyze how to reach the net zero emissions “in a way that is business-friendly and growth-friendly.” For this he appointed an official, the former Minister of Energy Chris Skidmoreknown for being one of the Conservative MPs most committed to zero emissions.
Source: Ambito
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